It could easily be much worse. Last time the Fed slashed interest rates to zero to stop the hemorrhaging. They are STILL at zero seven years later. There are very few bullets left in the gun without resorting to outright counterfeiting. This has already started in Japan and Europe (quantitative easing).

The entire system is leveraged to the hilt and nothing will stop the deflationary pressure when the money multiplier of fractional reserve lending runs in reverse. There could be bank holidays. After that, capital controls.

This will be much different than what's happening in Ukraine. It will be a deflationary collapse.

In the US... They've doubled the money supply in the last decade, and the only tool is printing more, where does deflation come in, in this equation?

less than 10% of U.S. dollars are created by Federal Reserve balance sheet expansion. The rest are created when fractional reserve banks lend out demand deposits, meaning the money is in two places at once. (in your checking account and with the loan recipient). This is the money multiplier. But when banks stop lending as they did in 2008, the existing loans still are getting paid back so the money created out of thin air disappears. The money multiplier runs in reverse. Less money chasing the same amount of goods and services= deflation.

It could easily be much worse. Last time the Fed slashed interest rates to zero to stop the hemorrhaging. They are STILL at zero seven years later. There are very few bullets left in the gun without resorting to outright counterfeiting. This has already started in Japan and Europe (quantitative easing).

The entire system is leveraged to the hilt and nothing will stop the deflationary pressure when the money multiplier of fractional reserve lending runs in reverse. There could be bank holidays. After that, capital controls.

This will be much different than what's happening in Ukraine. It will be a deflationary collapse.

In the US... They've doubled the money supply in the last decade, and the only tool is printing more, where does deflation come in, in this equation?

less than 10% of U.S. dollars are created by Federal Reserve balance sheet expansion. The rest are created when fractional reserve banks lend out demand deposits, meaning the money is in two places at once. (in your checking account and with the loan recipient). This is the money multiplier. But when banks stop lending as they did in 2008, the existing loans still are getting paid back so the money created out of thin air disappears. The money multiplier runs in reverse. Less money chasing the same amount of goods and services= deflation.

So what do we think happens if/when it *does* recover, after base-money has been expanded by $Ts? Can and will the Fed contract *perfectly*? This all boils down to how well they can thread the needle.

I don't know about you guys, but my bet is that a small group of people can't perfectly handle an increasingly complex (mathematically chaotic) system with almost absolute perfection over arbitrarily long time-periods.

That said, the only hope is an unprecedented US-tech driven multi-decade global expansion (which can actually happen if regulators and congress back off for a while).

Bitcoin is the first monetary system to credibly offer perfect information to all economic participants.Cryptoasset rankings and metrics for investors: http://onchainfx.com

It could easily be much worse. Last time the Fed slashed interest rates to zero to stop the hemorrhaging. They are STILL at zero seven years later. There are very few bullets left in the gun without resorting to outright counterfeiting. This has already started in Japan and Europe (quantitative easing).

The entire system is leveraged to the hilt and nothing will stop the deflationary pressure when the money multiplier of fractional reserve lending runs in reverse. There could be bank holidays. After that, capital controls.

This will be much different than what's happening in Ukraine. It will be a deflationary collapse.

In the US... They've doubled the money supply in the last decade, and the only tool is printing more, where does deflation come in, in this equation?

less than 10% of U.S. dollars are created by Federal Reserve balance sheet expansion. The rest are created when fractional reserve banks lend out demand deposits, meaning the money is in two places at once. (in your checking account and with the loan recipient). This is the money multiplier. But when banks stop lending as they did in 2008, the existing loans still are getting paid back so the money created out of thin air disappears. The money multiplier runs in reverse. Less money chasing the same amount of goods and services= deflation.

So what do we think happens if/when it *does* recover, after base-money has been expanded by $Ts? Can and will the Fed contract *perfectly*? This all boils down to how well they can thread the needle.

I don't know about you guys, but my bet is that a small group of people can't perfectly handle an increasingly complex (mathematically chaotic) system with almost absolute perfection over arbitrarily long time-periods.

That said, the only hope is an unprecedented US-tech driven multi-decade global expansion (which can actually happen if regulators and congress back off for a while).

You are underestimating the prevalence of the status quo and the propension of humans to adapt to terrible conditions. There is quite a margin left to squeeze on the majority of US/EU citizens..

It could easily be much worse. Last time the Fed slashed interest rates to zero to stop the hemorrhaging. They are STILL at zero seven years later. There are very few bullets left in the gun without resorting to outright counterfeiting. This has already started in Japan and Europe (quantitative easing).

The entire system is leveraged to the hilt and nothing will stop the deflationary pressure when the money multiplier of fractional reserve lending runs in reverse. There could be bank holidays. After that, capital controls.

This will be much different than what's happening in Ukraine. It will be a deflationary collapse.

In the US... They've doubled the money supply in the last decade, and the only tool is printing more, where does deflation come in, in this equation?

The narrow money supply is a tiny amount compared to the leviathon of credit money.

It could easily be much worse. Last time the Fed slashed interest rates to zero to stop the hemorrhaging. They are STILL at zero seven years later. There are very few bullets left in the gun without resorting to outright counterfeiting. This has already started in Japan and Europe (quantitative easing).

The entire system is leveraged to the hilt and nothing will stop the deflationary pressure when the money multiplier of fractional reserve lending runs in reverse. There could be bank holidays. After that, capital controls.

This will be much different than what's happening in Ukraine. It will be a deflationary collapse.

In the US... They've doubled the money supply in the last decade, and the only tool is printing more, where does deflation come in, in this equation?

less than 10% of U.S. dollars are created by Federal Reserve balance sheet expansion. The rest are created when fractional reserve banks lend out demand deposits, meaning the money is in two places at once. (in your checking account and with the loan recipient). This is the money multiplier. But when banks stop lending as they did in 2008, the existing loans still are getting paid back so the money created out of thin air disappears. The money multiplier runs in reverse. Less money chasing the same amount of goods and services= deflation.

So what do we think happens if/when it *does* recover, after base-money has been expanded by $Ts? Can and will the Fed contract *perfectly*? This all boils down to how well they can thread the needle.

I don't know about you guys, but my bet is that a small group of people can't perfectly handle an increasingly complex (mathematically chaotic) system with almost absolute perfection over arbitrarily long time-periods.

That said, the only hope is an unprecedented US-tech driven multi-decade global expansion (which can actually happen if regulators and congress back off for a while).

The Fed is playing it by ear. They can't know the long term outcome of extended periods of ZIRP/NIRP - it's the most consequential live experiment in history, yet it gave us Bitcoin.

So what do we think happens if/when it *does* recover, after base-money has been expanded by $Ts? Can and will the Fed contract *perfectly*? This all boils down to how well they can thread the needle.

I don't know about you guys, but my bet is that a small group of people can't perfectly handle an increasingly complex (mathematically chaotic) system with almost absolute perfection over arbitrarily long time-periods.

The problem is that the Fed keeps purchased assets in its balance at purchase value. When they are sold the new, probably inferior, value would have to be recognized, and the difference will be inflation. How they will do this in a controlled fashion is anyone's guess

So what do we think happens if/when it *does* recover, after base-money has been expanded by $Ts? Can and will the Fed contract *perfectly*? This all boils down to how well they can thread the needle.

I don't know about you guys, but my bet is that a small group of people can't perfectly handle an increasingly complex (mathematically chaotic) system with almost absolute perfection over arbitrarily long time-periods.

The problem is that the Fed keeps purchased assets in its balance at purchase value. When they are sold the new, probably inferior, value would have to be recognized, and the difference will be inflation. How they will do this in a controlled fashion is anyone's guess

Why do they need to be sold? Why do people worry about Americas debt to GDP level when 1/3 of it is held by the federal reserve (and therefore does not exist in the conventional sense of carrying a cost burden)?

With as many people predicting a stock crash, I wouldn't be surprised to see another QE appear just in time to screw everyone who is sensibly short.

No sense in qe right now as economy is seemingly stable.. it will happen once usd goes parabolic

I called for USD volatility back in July and it looks like we got the deflation variety so far. What is interesting is that the USD is above the highs in 2009 without the collapse in stocks. This trend could continue for a while but eventually I suspect stocks will turn down prompting another round of QE.

Currencies around the world are beginning to collapse: Russian Ruble, Ukrainian hryvnia, Swiss Franc debacle, and uprecedented easing. This may result in a cascading effect, beginning with fiat currencies of smaller countries but eventually encompassing larger, more well-known currencies such as the euro and the dollar. Bitcoin and potentially a select few other digital currencies should rise from the ashes as dominant world currencies.

usd and stocks should be positively correlated again.. going up atleast. Atleast for next while

Although bitcoin was designed to be ideal money usd and euro is as of right now

"You care about disruption and have opinions on the future of banking, the payments system, and how to improve upon our existing financial infrastructure. You have an opinion on bitcoin and other cryptocurrencies."

It could easily be much worse. Last time the Fed slashed interest rates to zero to stop the hemorrhaging. They are STILL at zero seven years later. There are very few bullets left in the gun without resorting to outright counterfeiting. This has already started in Japan and Europe (quantitative easing).

The entire system is leveraged to the hilt and nothing will stop the deflationary pressure when the money multiplier of fractional reserve lending runs in reverse. There could be bank holidays. After that, capital controls.

This will be much different than what's happening in Ukraine. It will be a deflationary collapse.

In the US... They've doubled the money supply in the last decade, and the only tool is printing more, where does deflation come in, in this equation?

less than 10% of U.S. dollars are created by Federal Reserve balance sheet expansion. The rest are created when fractional reserve banks lend out demand deposits, meaning the money is in two places at once. (in your checking account and with the loan recipient). This is the money multiplier. But when banks stop lending as they did in 2008, the existing loans still are getting paid back so the money created out of thin air disappears. The money multiplier runs in reverse. Less money chasing the same amount of goods and services= deflation.

So what do we think happens if/when it *does* recover, after base-money has been expanded by $Ts? Can and will the Fed contract *perfectly*? This all boils down to how well they can thread the needle.

I don't know about you guys, but my bet is that a small group of people can't perfectly handle an increasingly complex (mathematically chaotic) system with almost absolute perfection over arbitrarily long time-periods.

That said, the only hope is an unprecedented US-tech driven multi-decade global expansion (which can actually happen if regulators and congress back off for a while).

It's quite likely we passed a complexity point where a small group of people can't perfectly manage this system around the end of the last century.

Volatility has exploded since the late 90's, first a massive stock bubble, then massive crash, then a massive housing bubble, then an even bigger crash, now a more massive debt and central bank bubble. The fact that the swings are becoming larger and more pronounced shows they are losing the ability to manage all this leverage, which is exactly what you need to do when the banking sector is leveraged more than 10x.

After the last crash, this small group of people openly stated "never again". Meaning they were going to lean on the side of accommodation more than ever before to make absolute sure we're protected against the downside. The reason is the last crash unexpectedly started to run out of their control and demonstrated that their ability to predict and forecast is becoming less and less accurate, which in turn forces them to hedge more and more on the upside.

The problem with this is it means they acknowledged that because they don't understand or can control the system well enough, it is now necessary to hedge on the upside to make up for this lack of understanding and control.

What this also means is both the next blow up and then crash down will be even more pronounced and even further beyond their control. Your only hedge against this is to get as much as possible out of the banking system and anything it touches.

It could easily be much worse. Last time the Fed slashed interest rates to zero to stop the hemorrhaging. They are STILL at zero seven years later. There are very few bullets left in the gun without resorting to outright counterfeiting. This has already started in Japan and Europe (quantitative easing).

The entire system is leveraged to the hilt and nothing will stop the deflationary pressure when the money multiplier of fractional reserve lending runs in reverse. There could be bank holidays. After that, capital controls.

This will be much different than what's happening in Ukraine. It will be a deflationary collapse.

In the US... They've doubled the money supply in the last decade, and the only tool is printing more, where does deflation come in, in this equation?

less than 10% of U.S. dollars are created by Federal Reserve balance sheet expansion. The rest are created when fractional reserve banks lend out demand deposits, meaning the money is in two places at once. (in your checking account and with the loan recipient). This is the money multiplier. But when banks stop lending as they did in 2008, the existing loans still are getting paid back so the money created out of thin air disappears. The money multiplier runs in reverse. Less money chasing the same amount of goods and services= deflation.

So what do we think happens if/when it *does* recover, after base-money has been expanded by $Ts? Can and will the Fed contract *perfectly*? This all boils down to how well they can thread the needle.

I don't know about you guys, but my bet is that a small group of people can't perfectly handle an increasingly complex (mathematically chaotic) system with almost absolute perfection over arbitrarily long time-periods.

That said, the only hope is an unprecedented US-tech driven multi-decade global expansion (which can actually happen if regulators and congress back off for a while).

It's quite likely we passed a complexity point where a small group of people can't perfectly manage this system around the end of the last century.

Volatility has exploded since the late 90's, first a massive stock bubble, then massive crash, then a massive housing bubble, then an even bigger crash, now a more massive debt and central bank bubble. The fact that the swings are becoming larger and more pronounced shows they are losing the ability to manage all this leverage, which is exactly what you need to do when the banking sector is leveraged more than 10x.

After the last crash, this small group of people openly stated "never again". Meaning they were going to lean on the side of accommodation more than ever before to make absolute sure we're protected against the downside. The reason is the last crash unexpectedly started to run out of their control and demonstrated that their ability to predict and forecast is becoming less and less accurate, which in turn forces them to hedge more and more on the upside.

The problem with this is it means they acknowledged that because they don't understand or can control the system well enough, it is now necessary to hedge on the upside to make up for this lack of understanding and control.

What this also means is both the next blow up and then crash down will be even more pronounced and even further beyond their control. Your only hedge against this is to get as much as possible out of the banking system and anything it touches.

it's still crystal clear in my mind back in 2008 how Tim Geithner said over and over that "we" needed to use massive force to prevent a meltdown. naturally, as head of the NY Fed at the time, this meant massive money printing to hand over to the banks in the form of bailouts. now, he has the audacity to say that the economy is weak b/c he wasn't allowed to use enough massive force. as if the banks didn't make enough as it is from what they did. and as if the wealth disparity that resulted wasn't enough from what he did. Bernanke was being lead around by the ear by Geithner and Paulson at the time. don't let Geithner re-write history as he desperately is trying to do.

It could easily be much worse. Last time the Fed slashed interest rates to zero to stop the hemorrhaging. They are STILL at zero seven years later. There are very few bullets left in the gun without resorting to outright counterfeiting. This has already started in Japan and Europe (quantitative easing).

The entire system is leveraged to the hilt and nothing will stop the deflationary pressure when the money multiplier of fractional reserve lending runs in reverse. There could be bank holidays. After that, capital controls.

This will be much different than what's happening in Ukraine. It will be a deflationary collapse.

In the US... They've doubled the money supply in the last decade, and the only tool is printing more, where does deflation come in, in this equation?

less than 10% of U.S. dollars are created by Federal Reserve balance sheet expansion. The rest are created when fractional reserve banks lend out demand deposits, meaning the money is in two places at once. (in your checking account and with the loan recipient). This is the money multiplier. But when banks stop lending as they did in 2008, the existing loans still are getting paid back so the money created out of thin air disappears. The money multiplier runs in reverse. Less money chasing the same amount of goods and services= deflation.

So what do we think happens if/when it *does* recover, after base-money has been expanded by $Ts? Can and will the Fed contract *perfectly*? This all boils down to how well they can thread the needle.

I don't know about you guys, but my bet is that a small group of people can't perfectly handle an increasingly complex (mathematically chaotic) system with almost absolute perfection over arbitrarily long time-periods.

That said, the only hope is an unprecedented US-tech driven multi-decade global expansion (which can actually happen if regulators and congress back off for a while).

It's quite likely we passed a complexity point where a small group of people can't perfectly manage this system around the end of the last century.

Volatility has exploded since the late 90's, first a massive stock bubble, then massive crash, then a massive housing bubble, then an even bigger crash, now a more massive debt and central bank bubble. The fact that the swings are becoming larger and more pronounced shows they are losing the ability to manage all this leverage, which is exactly what you need to do when the banking sector is leveraged more than 10x.

After the last crash, this small group of people openly stated "never again". Meaning they were going to lean on the side of accommodation more than ever before to make absolute sure we're protected against the downside. The reason is the last crash unexpectedly started to run out of their control and demonstrated that their ability to predict and forecast is becoming less and less accurate, which in turn forces them to hedge more and more on the upside.

The problem with this is it means they acknowledged that because they don't understand or can control the system well enough, it is now necessary to hedge on the upside to make up for this lack of understanding and control.

What this also means is both the next blow up and then crash down will be even more pronounced and even further beyond their control. Your only hedge against this is to get as much as possible out of the banking system and anything it touches.

it's still crystal clear in my mind back in 2008 how Tim Geithner said over and over that "we" needed to use massive force to prevent a meltdown. naturally, as head of the NY Fed at the time, this meant massive money printing to hand over to the banks in the form of bailouts. now, he has the audacity to say that the economy is weak b/c he wasn't allowed to use enough massive force. as if the banks didn't make enough as it is from what they did. and as if the wealth disparity that resulted wasn't enough from what he did. Bernanke was being lead around by the ear by Geithner and Paulson at the time. don't let Geithner re-write history as he desperately is trying to do.

It's never ever enough. People today bash Hoover for not doing enough, but the reality is he took the most accommodative approach of any President in US History at the time, with larger deficits, printing, etc. This really was the moment the US's Laissez-faire (meaning a policy of letting things take their own course) economy died. The fact that his successor quadrupled down on this accommodation doesn't change the fact that Hoover was the helicopter Ben of his time.

It is always never enough and they will keep expanding accommodation until the public takes away their primary tool by re-valueing government money to zero.